advertisement


Retirement

Mick P said:
The daftest strategy is to rely on your house as a pension, it never works. What is the point in working all your life to buy the house you want only to down grade when you will be spending more time in it. Also prices will probably soon drop as a few million baby boomers die off and the market is flooded with 4 bedroomed houses being put on the market. Just remember in five years from now, the baby boomer deaths will begin to hit in and the demographics are really going to change and inheritances are going to be soaked up with taxes and nursing home costs. So the house that you rely on for a pension is going to be worth considerably less and you will suffer as a result.
Click to expand...

Downsizing isn't just about making money; it's also about not having to faff about with maintaining a large property and/or garden, and not having to climb lots of stairs. We have thought about it on and off, and we certainly don't need the money, but always come to the conclusion that we like the house, the road it's in, the neighbours, and the neighbourhood, and that moving would be a bit of a gamble. As for house prices tumbling, I've heard predictions about this for twenty years or more, and will believe it when I see it.
 
Has anyone gone down the 'lifetime mortgage' or equity release routes? We have two houses, both with mortgages, both interest only, so to pay off the mortgage on the one house would take all of our savings and more, and the other would take all of our pension pot. We rent one house to a family member, so we can't really sell it, and we don't want to sell our main house, even though we know its going to cost us a lot in maintenance (500yr old thatched cottage!). Our IFA has recommended that we look at these options, and also reckons our pensions are ok, but when we ask for specific figures, he's unable to be very specific, for reasons I understand. I'm embarking on a nine year slowing down phase with my employers, who are supportive. I will have plenty to do, when I retire, as I'm a (unpaid) director of another company, have my photography, and would like to travel more, but I'm unsure I'll be able to afford any of this...
 
I’m curious about the logic of having two interest only mortgages and savings/ investments at the same time Jem. We worked steadily at getting rid of mortgage debt rather than saving (other than contingency funds) because when it comes to interest on debt and deposits, the banker always wins. Also the endowment route - “give us your money and we’ll cleverly invest it to pay your mortgage debt off at the end while you service the interest” proved to be such an obvious con in hindsight and with the benefit of experience.
 
TheDecameron said:
I’m curious about the logic of having two interest only mortgages and savings/ investments at the same time
Click to expand...
It does seem illogical, but the savings are historic ISAs and an offset account as part of one mortgage, which reduces the interest on the big mortgage. Both mortgages are 1/2% over base so are best left where they are until the end of the term, as we won't get a rate like that again. Our IFA has put the ISAs with a wealth management company that manages to beat our mortgage rate with our savings and SIPPs.
 
JemHayward said:
It does seem illogical, but the savings are historic ISAs and an offset account as part of one mortgage, which reduces the interest on the big mortgage. Both mortgages are 1/2% over base so are best left where they are until the end of the term, as we won't get a rate like that again. Our IFA has put the ISAs with a wealth management company that manages to beat our mortgage rate with our savings and SIPPs.
Click to expand...

Yup ! Makes sense at those rates. When you do sell off one house, though, a certain amount of jiggery-pokery will be needed to minimise cap. gains. I was unhappy to see the back of taper relief as it was quite effective when disposing of my then part-owned 3 rental properties. I'd be stung now, though, if I off-loaded either of my current ones, even at the current lower rate.
 
Mike Reed said:
Or buy a property to let, though maybe the horse has bolted on that one with the swingeing penalties foisted on landlords to be. Carillion's demise shows that the stock market is a gamble; especially now at the FTSE's and others' current peaks.

I love inflation; it increases my pensions annually !
Click to expand...

the horse has bolted but if you had enough capital and it was in brilliant condition with few void periods it might be worth a punt. but stamp duty has really made it hard as well as the tax rises which are potentially humungus
 
hifinutt said:
made it hard as well as the tax rises which are potentially humungus
Click to expand...

Tax rises? D'you mean the diminishing value of mortgage interest which can be declared as relief? I only know of that and the 3% extra stamp duty. Depending on which part of the country you are buying, capital gains on buy-to-let property may well have effectively run its course; at least for the next decade. All that leaves is the yield via rental income. Use an agent to manage and that severely impinges on that aspect.

The burgeoning property portfolios cleverly (if riskily) built up in the past are indeed a thing of the past, more or less as George Osborne designed.
 
yes , the new tax rises over next 4 years which in some cases have pushed folks into higher rate tax with no extra actual income , also no longer can you claim those arrangement fees when you renew mortgage deal , also no more 10% wear and tear and stamp duty can be more than 3% in some areas .

From the 1st April 2016 anyone purchasing a property in addition to their main home will pay an additional 3% SDLT for the first £125,000 and 5% instead of 2% on the portion between £125,001 and £250,000 and 8% on the amount above £250,001.

http://www.knightfrank.co.uk/buy-to-let-stamp-duty-calculator
 
In all fairness, that 10% wear and tear allowance was always only for fully furnished properties but was widely and wrongly claimed for unfurnished with a chair in it !!!. An option before, still used in holiday lets, you can now only claim for replacements.

I still don't understand your 'new tax rises', though. What tax rises? The consequences of the mortgage relief tapering off could push landlords into a higher band, but that's a different scenario. The extra s.d. is 3% above ANY band, incl. nil band, so the figures are as you say.

It's put me off any additions (and haven't used mortgages anyway), but in truth I'm too old for even the small hassles I get now. I'd like to totally retire, but existing B.T.L. is one of the few (or the only, after Carillion?) decent and almost risk-free yields on savings there is. There's the dubious comfort that one is also providing a home for someone who doesn't want ownership or the responsibilities that go with it. That's the altruistic take and I'm sticking to it ! :D
 
Mike Reed said:
It's put me off any additions (and haven't used mortgages anyway), but in truth I'm too old for even the small hassles I get now. I'd like to totally retire, but existing B.T.L. is one of the few (or the only, after Carillion?) decent and almost risk-free yields on savings there is. There's the dubious comfort that one is also providing a home for someone who doesn't want ownership or the responsibilities that go with it. That's the altruistic take and I'm sticking to it !
Click to expand...

As house prices are topping out, why don't you flog off the BTL properties and put the money into decent equity income funds? You can easily get well over 4% income hassle free with a likelihood of a growing income in excess of inflation. Some funds will give you 7% income if you give up on capital growth.

Can't see the obsession with BTL myself.
 
No pension here, so I'll just be walking into the sea when I retire.

davidsrsb said:
You lot show the main advantage of living in the UK, which is the health service.
Live in a country with private health insurance and retirement is a big problem
Click to expand...

I think they just show the main advantage of being old!
 
NeilR said:
As house prices are topping out, why don't you flog off the BTL properties and put the money into decent equity income funds? You can easily get well over 4% income hassle free with a likelihood of a growing income in excess of inflation. Some funds will give you 7% income if you give up on capital growth.

Can't see the obsession with BTL myself.
Click to expand...

Already have a small share portfolio; don't really want any more in any guise, esp. as equities may well be at highs. Besides, yield is nearly twice 4% and reliable/long-term tenants should be good for a few years yet. Hopefully I shall be too !
 
Mike Reed said:
Already have a small share portfolio; don't really want any more in any guise, esp. as equities may well be at highs. Besides, yield is nearly twice 4% and reliable/long-term tenants should be good for a few years yet. Hopefully I shall be too !
Click to expand...

where are your properties?

Our house in SE England that we are renting out while we are in Switzerland gives us 3% yield. we are selling it now as the hassle is not worth it.

If you are buying equities for yield until you die, who cares whether share prices go up or down, as long as the yield that you receive increases with inflation, it doesn't really matter.
 
I agree with NeilR.

When people talk about BTL yields it’s all meaningless unless they clarify gross or nett.

My yields looked impressive until I factored in agent costs, non payment of rent insurance costs (a no brainer after your first experience of twatty tenants), annual checks, refurbishment, redecoration, empty periods with no income, accountants fees.

In the end I got out as it barely bettered returns from stocks and shares.
 
I had a BTL in south Manchester, I bought it in 2014 and sold it in 2016. I managed it myself but had a agent market it. Net of income tax, CGT, SDLT and fees I made 10%. Much of the yield was because I was fortunate that the capital value rose 100k in the 2 years but then again I deliberately chose the property for providing a mix of capital gain and income. The area is still rising in value but much more slowly now.
 
My retirement does not revolve around how much dosh, investments, house value, blah,blah blah, I have enough and that is that, if I run out of dosh I will worry about it then, not now.

Today, I am boxing audio cables and making a detail for under my recently converted t/t shelf to hold 2 decks. I will forego a lunch break, work through until 3'ish, have a shit, shower and shoe shine and down the pub with my wife and woofer for a few snifters and a pub meal. That is what I call retirement, enjoy.

Bloss
 
I have no clear concept of my own retirement (in ~18 years). I have no savings and a comparatively tiny pension fund. Unless I have a lucky spin of Fortuna's wheel in the meantime I'll be joining Matt J for a long dip in the sea (though I will try to put aside enough to pay for a flight to somewhere with warmer waters).
 
You must log in or register to reply here.


advertisement


Back
Top